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CBN, commercial banks to bring 60m Nigerians into financial space

Last week, the Central Bank of Nigeria (CBN), commercial banks, licensed mobile money operators and super agents reached an agreement to fund the expansion of a shared agent network to deepen financial inclusion in Nigeria.  

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The agreement entails an aggressive rollout of 500,000-agent network within two years to offer basic financial services such as cash-in, cash-out, funds transfer, bill payments, airtime purchase, government disbursements, as well as remote enrollment on BMS Infrastructure (BVN) to an estimated 50 million Nigerians that are currently under-banked or unbanked. 

According to the World Bank, financial inclusion requires that adult individuals and businesses have access to useful and affordable financial products and services that meet their needs, such as cash transfer, payments, savings, credit and insurance – delivered in a responsible and sustainable way.

It is believed that access to a bank account is a first step toward broader financial inclusion since it allows people to store money, send money and receive payments. Transaction is a gateway to other financial services, which is why ensuring that people worldwide can have access to a transaction account is the focus of  World Bank groups.

Nigerian chief executive officers of banks  recognize that access to financial services is an enabler to economic and social development. To this end, Nigerian banks have  fully committed to bringing inboard, the  underserved and low income by driving digital access to, and use of formal financial services by excluded Nigerians,  in line with  CBN’s 80per cent financial inclusion by 2020.

This new project will see the CBN, commercial banks,  super agents and  licensed mobile money operators through a shared agent network programme to accelerate financial inclusion in Nigeria with   the introduction of new micro loans, savings, insurance and pension products for the benefit of the  unbanked, financially excluded and low income.

Over the next three years, Nigerian banks aim to on-board and formally bank 60 million additional early, as well as enroll 40 million additional Nigerians for BVN an average of 20 million yearly, as well as enroll 40 million additional Nigerians for BVN.

To achieve this, the commercial banks  have taken into cognizance the existing factors inhibiting financial inclusion in Nigeria, which  include limited financial services touch points, limited customer education and awareness (financial literacy), unemployment and poverty levels.

Ten licensed mobile money operators and super agents are expected to deploy financial services agents’ outlets immediately in underserved urban and rural areas in Nigeria, with higher priority in the northern geo-political zones where financial exclusion is most predominant. 

The approved CBN-Bankers  Committees’ roll-out ratio is as follows: North-East 30%; North-West 30%; North-Central 20%; South-South 7.5%; South-East 7.5%; and South-West 5%.  Some of the prequalified CBN licensed operators include Capricorn Digital Limited, Cellulant Nigeria Limited, eTranzact Limited, Innovectives Limited, Inlaks Limited, Interswitch Financial Inclusion Services Limited, Paga Tech Limited and Unified Payments Nigeria Plc.

According to the plan, the CBN and Nigerian banks will, over the next few months, also roll out new initiatives, products and services to accelerate and deepen financial inclusion in Nigeria.  To this end, renewed focus will be given to driving low cost digital access, broadening financial literacy campaigns, and creating micro loans, micro insurance and micro investment products for the benefit of excluded, underserved and low income Nigerians. 

The CBN will also facilitate the channeling of government intervention and similar payments through the shared agent network, review guidelines to achieve a commercially viable pricing model for the agent networks, obtain special concessions from state governments for common signage and collaterals to drive awareness, provide flexible regulatory framework for BVN enrolment and standardise KYC for account opening across all institutions and consider the re-instatement of the Cashless policy to drive activity to the agent locations.

Commenting on the shared agent network expansion programme, the chairman of the Body of Bank Chief Executive Officers, Mr. Herbert Wigwe, the chief executive officer  of Access Bank Plc said; “This agreement reflects our commitment to aggressively pursue the CBN 2020 financial inclusion target in an integrated way with minimal systemic risk to the financial system.  This initiative will also generate over 500,000 new jobs over the next two years.

“Hopefully, we can see more SMEs getting lending at a single-digit interest rate.”

The chief executive officer of United Bank for Africa,  Kennedy Uzoma said: “We are bringing banking services to individuals that are excluded. So, it is not just about loans, it is the entire things that you will get from the banks. So be rest assured that people who will come to the network based on the extended infrastructure that we are providing will have access to banking service.”

Segun Agbaje, the chief executive officer of the Guaranty Trust Bank said: “The difference between this programme and others in the past is that this is being led by the private sector and the banks. 

“This is not a government-led initiative. As banks, anything we start, we tend to finish. This is not being done for profit. Ultimately, profit will eventually come, but initially, the whole objective is to bring people into the financial system. And the money we are using are monies we had already set aside out of the profit we had made. So, this is an initiative that is essentially for Nigeria and to bring people into the financial system. It is about deepening the financial system.”

Peter Amango, the chief executive officer of Zenith Bank, in his remark, said the most important aspect of this initiative was to bring the unbanked into the financial system.

“We are poised to providing convenience at an affordable cost. We are engaging the telcos, and the CBN is with us on this. We want to bring all those in the rural areas in.”

Uzoma Dozie, the chief executive officer of Diamond Bank said it  was a shared vision to take on   the cost of reaching the unbanked. “We are investing in the future, and this is one thing that will benefit the entire nation.”

Commenting on behalf of the mobile money operators, Tayo Oviosu, founder and chief executive officer of Paga, said, “To significantly grow financial inclusion in Nigeria, we need to offer truly effective digital financial services that operate on all mobile telecom networks and a robust nationwide network of agents for convenient access. The Shared Agent Network Expansion programme supports our plans to rapidly scale up the agent network over the next year. With this expansion programme, the entire financial industry will reach deeper into even more communities and give millions of Nigerians a convenient access to financial services. 

According to the Access to Financial Services in Nigeria 2016 Survey, 41.6 per cent of the Nigerian adult population are financially excluded, with the financially excluded population growing from 36.9 million in 2014 to 40.1 million in 2016.

The CBN governor, Mr. Godwin Emefiele, had on many public fora recanted  that the apex bank would aggressively pursue its 20 per cent financial exclusion target by 2020.

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